Officials in the State of Washington Fail to Comprehend

by Kenneth Jernigan

A number of years ago when I was living in Iowa, I had occasion to talk with the State Insurance Commissioner about discrimination against the blind by the insurance industry. He took a very pious and sanctimonious attitude about the matter, saying something to this effect: "I know how much the blind need insurance, and other groups as well. We have been giving thought to the need for insurance by people with severe heart problems, severe diabetes, and other disabling conditions. These are the people who need insurance most. Yet, it is not available to them. Of course, such insurance would be an added cost to the insurance companies, and we have difficulty getting them to realize their social obligations. Maybe we should get the legislature to appropriate funds to alleviate the situation, but you know how backward and unprogressive the legislators are. It is really quite a problem, but I want you to know that I am extremely sympathetic to your cause."

It was a disgusting display of muddled thinking, misplaced self-congratulation, and complete lack of comprehension. I replied essentially as follows: "You have missed my point entirely. If you know an insurance company which will write insurance on equal terms for people with severe heart conditions and people in good health, please tell me about it so that I can make certain never to have anything to do with it. Such a company would necessarily be run by a passel of idiots, and it would likely go broke before it could pay its claims. If the blind are a greater risk than others (that is, if they die at a younger age, have more accidents, or get sick more often), then we don't want insurance on equal terms with others, and we shouldn't have it. The point is that the blind are not greater risks, and there is absolutely no evidence to the contrary. Your tears and pity are inappropriate. What we want is justice, not sympathy."

He was less than pleased with my response, and the blind of Iowa had to wait for another insurance commissioner before the matter could be seriously remedied. Incidentally, the self- righteous tear jerker thought of himself as a "liberal," and the man who took action and did something to give us justice thought of himself as a "conservative." I am not suggesting that all liberals are dunces and all conservatives upright geniuses, only that there is nothing magic about political labels and that we are as likely to find understanding and common sense on one end of the spectrum as the other.

In the state of Washington we are now dealing with a situation similar to the one we faced in Iowa. The Insurance Commissioner tells us that he is very "consumer oriented," very concerned with all of the disabled, and very much concerned with the general social good of the state in particular and humanity in general. He also takes it for granted that the blind are greater insurance risks than others and that when we say we do not wish discrimination against the blind in the issuance of insurance, we are asking that each and every blind person (regardless of his or her physical or mental condition) be given standard rate insurance coverage. This, of course, is absolute nonsense. We are asking for insurance on equal terms with others, not preferential treatment. If a blind person has cancer or a damaged heart or webbed toes, we ask that he or she be treated like others in the same situation. We are saying that blindness should not be grounds for separate classification and different insurance rates. It should not, that is, unless somebody can come up with actuarial data to prove that it should be.

This is not a difficult concept to grasp. Since we must assume that the Insurance Commissioner for the state of Washington is not defective mentally, are we to conclude that he is only pretending to fail to understand? Here is the pertinent correspondence. As the weeks go by, there will doubtless be more. That is one reason for our popularity ratings in certain quarters. It is also a prime factor in the progress we are making toward first-class citizenship:

RE:NAIC Resolution and Model Regulations on Discrimination

Dear Commissioner:

Last December 14, the Executive Committee of the National Association of Insurance Commissioners adopted an amendment to the "Model Regulation on Unfair Discrimination on the Basis of Blindness or Partial Blindness." The amendment essentially deletes the "exception clause" from the existing NAIC model regulation. Washington's statute prohibiting discrimination, RCW 48.30.300, roughly parallels the old NAIC model, except that it prohibits discrimination against persons with a broad range of handicaps--including blindness. The statute contains a version of the "exception clause," as well. This clause, which makes discrimination lawful when it is supported by actuarial data, has provided the insurance industry with a "loophole" through which some companies have justified discriminatory underwriting practices.

I would appreciate knowing whether your office supports the new NAIC model regulation. If you do support it, would you support and testify on behalf of a bill dropping the "exception clause" from RCW 48.30.300, if offered during an upcoming legislative session?

Very truly yours,

Scott Lewis

Port Angeles, Washington
March 28, 1985

Dear Mr. Lewis:

Olympia, Washington
April 4, 1985

Thank you for your recent letter relative to the NAIC Model Regulation on Unfair Discrimination on the Basis of Blindness or Partial Blindness. We have had several staff discussions on this subject and find we have little or no problems with RCW 48.30.300 with respect to blindness. We keep a record of discrimination complaints and we get virtually none. If, in fact, you have specific violations where companies have discriminated against the blind, we would like specific examples in order that we might take appropriate action. If we should find that there are violations and that the handicap of blindness needs different treatment from other handicaps, we will consider any necessary changes to the law. Thank you for writing.

Sincerely,

Dick Marquardt
Insurance Commissioner

Port Angeles, Washington
April 5, 1985

Dear Commissioner Marquardt:

I have received your letter dated April 4 responding to my recent inquiry regarding your position on the new NAIC Model Regulation on Unfair Discrimination on the Basis of Blindness or Partial Blindness. Your letter is more than somewhat vague, and I must ask you to review my initial letter (copy enclosed) and your response (copy enclosed) and to try to be more specific in answering my question.

You say that you "have had several staff discussions on this subject" and that you "have little or no problems with" the state law banning discrimination on the basis of, among other things, blindness. Yet, you give no indication whatsoever whether you support the new NIAC model, or what the context of your "staff discussions" was. Do you support the new NAIC model? Would you promote, support, or encourage legislation that would bring RCW 48.30.300 into line with the model? What was the context of your "staff discussions?" If there were memoranda or policies generated relative to these meetings or the NAIC's action, I would appreciate copies.

The tone of your letter leads me to believe that, because you "have little or no problems" with the existing statute as it applies to the blind, you would not support change. You cite a paucity of violations as justification. There have been violations, but in at least one instance your office sided firmly with the insurer. I enclose copies of articles from the Braille Monitor, the magazine of the National Federation of the Blind. The case referred to in these articles is my complaint against Lincoln National Corporation. I will appreciate your comments.

Sincerely,

Scott Lewis

Olympia, Washington
April 16, 1985

Dear Mr. Lewis:

You have several questions regarding Washington law and the National Association of Insurance Commissioners' amended Model Regulation on Unfair Discrimination on the Basis of Blindness or Partial Blindness. You also commented on your complaint against Lincoln National Insurance Company. I will try to respond.

First, ours is a consumer oriented and consumer protection office. We work to assure insurer's compliance with the letter and intent of state insurance laws and we try to spawn regulations and code changes that improve the lot of the insurance-buying public. Our mandate is to regulate insurers so they are able to honor their obligations to insureds and the public. I hope that is clear. In commenting on what I assume is your complaint against Lincoln National, you say this office "sided firmly with the insurer." It would be more fair to say we were unable to find that there was any violation of the Insurance Code in the matter as we reviewed the facts submitted.

I do not currently support the new NAIC model. My view may change, but only if I am convinced that the NAIC model helps consumers more than our present law.

It is difficult to argue that insurers should, under our free enterprise system, take on differing risks at similar premium rates. Bad drivers (based on their record) pay more for insurance than those drivers without accidents or tickets. People with health problems either have the condition excluded from the policy or pay more for health insurance. The pattern is clear and seems reasonable. You want to deny insurers any choice when it comes to insuring the blind. I think that may be something for the legislature to decide. What if statistics show there is a significant life or health difference facing the blind? What of other "disabilities?" Should they, too, receive blanket underwriting protection? You have been silent as to their interests. I think our present law helps all classes of people equally.

There is, of course, a larger social question. Maybe insurance is no longer a product people buy, but rather a service or right to which we are entitled. If you support the "insurance is right" theory, there are social costs to be considered, and the underwriting becomes quite different. There are social costs associated with our present system, too, and I feel ours is often an ineffective way of caring for people. I certainly do not propose to answer these questions but think much of what we face in cases like yours centers around these issues.

Please do not consider the question of the NAIC model closed, as far as we are concerned. Do, however, give us some credit for working to help the largest number of people. Often we find Washington's laws and regulations a step ahead of the NAIC. That may or may not be the case here, but let us work on the matter.